Judge allows country-of-origin labels

A federal judge told meat packers who see U.S. country-of-origin labeling mandates as harmful and expensive that they need to take their beef to Congress, rather than the courts.

The U.S. Department of Agriculture is stuck between “a rock and a hard place” — trying to implement labeling rules mandated by the farm bill without running afoul of international trade obligations, says U.S. District Judge Ketanji B. Jackson in her 76-page ruling. She rejected a preliminary injunction request that came from a coalition that included the Canadian and Mexican cattle and pork industries and U.S. meat packers that buy their products.

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The timing of the case is critical: The Agriculture Department is set to implement a new, stricter set of country-of-origin labeling requirements in November in response to a ruling by the World Trade Organization that found the old requirements to be protectionist. The department’s new labeling requirements ask for more details, however, requiring labels separately list where the livestock was born, raised and slaughtered — a move that does away with such vague labels as “Product of USA, Canada.”

The meat packers argued that the new rule would force them to stop “co-mingling” animals that are purchased from ranchers in different countries, which they said will cost the industry at least $200 million to build new pens and alter production processes.

In her ruling, Jackson wrote that the potential that “Buy American” sentiments would lead consumers — and as a result, meat packers — to turn away Canadian and Mexican products isn’t enough for a court to overturn the rule.

“It would be one thing if plaintiffs were making a substantiated allegation that the demands of complying with the final rule’s segregation and labeling requirements are in-and-of-themselves impossible to meet without destroying their companies,” Jackson wrote.

“But here, to the contrary, plaintiffs’ declarants appear most concerned that they will ultimately lose future business because others may respond to the new labeling rules and react in a manner that may ultimately affect their companies negatively.”

Jackson rejected opponents’ claim that the labels violate their First Amendment rights by compelling speech. She said the labeling is commercial speech and that the government has more power to impose regulations aimed at eliminating confusion — regardless of the potential costs of implementation. “In the First Amendment context, it is the burden on speech, not pocketbook, that matters,” she wrote.

Canada and Mexico, the two countries that had previously complained to the WTO, said last month that they are asking for yet another WTO compliance hearing — and both have threatened trade sanctions, too. Canada’s threat was the most specific. Its government said it would ask the WTO for permission to impose up to $1 billion in tariffs on U.S. products ranging from meat and apples to jewelry and furniture.

Jackson emphasized that her job was not to determine whether the Agriculture Department’s new rule met international trade obligations. She wrote that the department was “stuck between a rock and a hard place” because country-of-origin labeling is the law mandated by Congress.

“In the absence of a legislative solution to what the WTO had identified as problematic, the agency had to attempt to bring COOL regulations into compliance with the international tribunal’s decision without running afoul of the COOL statute,” she explained.

U.S. ranchers, as might be expected, are happy.

“We, of course, are pleased with the court’s decision to deny the preliminary injunction requested by the plaintiffs,” said Jon Wooster, the U.S. Cattlemen’s Association president and a rancher in San Lucas, Calif. The new rule will “certainly reduce consumer confusion and will allow cattle producers the ability to differentiate their product from foreign beef,” he said.

Opponents of the labeling rule called Jackson’s ruling disappointing and said they plan to appeal.

“We disagree strongly with the court’s decision and believe that several aspects of the ruling are susceptible to challenge, and we intend to pursue them on appeal,” said Patrick Boyle, president and chief executive of the American Meat Institute, which along with eight other groups sought the injunction.